Nepal’s private banking sector in the past years has collaborated with international organizations to finance climate resilience projects in the country. Several banks have secured funding and accreditation to support renewable energy, sustainable agriculture, and climate adaptation initiatives. But where are they allocating the funds and what type of project is those funds benefiting? Or really these banks are funding the right project or are they investing these climate-related funds to other non-climate projects?
In June 2023, Laxmi Sunrise Bank collaborated with Global Green Growth Institute (GGGI) to implement the Tarai Agribusiness and Enterprise Challenge Fund (TAECF) under the Korea International Cooperation Agency (KOICA)-GGGI Climate Smart Agriculture project. This initiative aims to support micro and small enterprises in the agriculture sector by providing grants and facilitating access to finance. The Bank has to play a crucial role in offering loans to grantees approved by GGGI, strengthening the agricultural value chain in Madhes Province.
Despite efforts to obtain comments and updates on the project, Chief Information Officer (CIO) of Laxmi Sunrise Bank, did not respond to inquiries via email or phone. Even after reporting it to the Chief Grievances Officer, there was no further update.
In March 2024, Nepal Investment Mega Bank Limited (NIMB) became the first private-sector commercial bank in Nepal to receive accreditation from the Green Climate Fund (GCF). This accreditation enables NIMB to manage climate projects ranging from $50m to $250m, facilitating investments in renewable energy, solid waste management, and climate adaptation projects through public-private partnerships.
Khushbu Thapa Magar, the Green Climate Fund (GCF) Project Manager at NIMB, provided an in-depth response regarding the bank’s role in climate finance. Her response outlined the bank’s structured approach to climate finance, which includes two key stages: ‘Concept Note Preparation’ and ‘Full Funding Proposal Development’. Initially, the bank identifies and develops investment-ready projects aligned with Nepal’s climate priorities and GCF criteria. Once approved, a detailed funding proposal is created, including feasibility studies, financial structuring, environmental and social assessments, and a Gender Action Plan.
“NIMB’s project pipeline focuses on various sectors crucial to Nepal’s climate goals, including renewable energy, e-mobility, waste-to-energy solutions, sustainable agriculture, urban resilience, and climate adaptation efforts,” says Magar. “The bank prioritizes projects with high paradigm shift potential, ensuring that they can be scaled and replicated nationwide.”
Magar further highlighted NIMB’s investment strategy, which includes concessional funding, public-private partnerships, and structured financial mechanisms to de-risk climate projects. “Additionally, NIMB follows strict environmental and social safeguards, promotes gender equality and social inclusion (GESI), and aligns its projects with Nepal’s Nationally Determined Contributions (NDCs) and Long-Term Strategies (LTS).”
In Oct 2023, Global IME Bank Limited (GIBL) secured a $25m loan from Global Climate Partnership Fund (GCPF) to promote climate-positive lending in Nepal. This funding is specifically allocated for energy efficiency and renewable energy projects, with a strong emphasis on electric mobility.
In Feb 2024, International Finance Corporation (IFC) invested $56m in GIBL to enhance access to finance for small and medium enterprises (SMEs), particularly women-owned businesses and those in rural areas. A portion of this funding is dedicated to climate mitigation efforts, including clean transportation, climate-smart agriculture, and solar energy projects.
In June 2024, the OPEC Fund for International Development provided a $25m loan to GIBL to support micro, small, and medium enterprises (MSMEs) while enhancing climate resilience in Nepal. This funding seeks to bridge financing gaps for MSMEs and expand the bank’s climate finance portfolio.
Despite attempts to obtain a statement, the CIO of GIBL did not respond to requests via email or phone. Even after reporting it to the Chief Grievances Officer, there was no update.
In May 2023, IFC invested $55m in Siddhartha Bank Limited (SBL) to increase access to finance for small businesses and foster climate finance in Nepal. The investment is expected to support clean transportation, climate-smart agriculture, and solar projects. However, no response was received from the CIO of SBL, despite multiple inquiries. The Chief Grievance Handling Officer was also not available.
These kinds of partnerships reflect Nepal’s growing engagement in climate finance and the private sector’s increasing role in sustainable development. With these collaborations, Nepal’s banking sector is positioning itself as a key player in financing the country’s transition toward a greener economy. However, challenges remain in ensuring the effective implementation of these funds and fostering greater transparency in climate-related investments.
